Tuesday, March 9, 2010

General Electric has been an investor disaster under Jeff Immelt (GE)

Why does this guy still have a job? The stock closed yesterday at $16.27.
From MarketWatch:

Commentary: CEO spends $200,000 on jets, $36,000 for car lease last year
When things go well, chief executives of major companies rack up hundreds of millions of dollars, even billions, on their stock allotments and options.

It's always justified on the grounds that they've created lots of shareholder value. But what happens when things go badly?

For one example, take a look at General Electric Co., one of America's biggest and most important companies. It just revealed its latest annual glimpse inside the executive swag bag.

By any measure of shareholder value, GE has been a disaster under Jeffrey Immelt. Investors haven't made a nickel since he took the helm as chairman and chief executive nine years ago. In fact, they've lost tens of billions of dollars.

The stock, which was $40 and change when Immelt took over, has collapsed to around $16. Even if you include dividends, investors are still down about 40%. In real post-inflation terms, stockholders have lost about half their money.

So it may come as a shock to discover that during that same period, the 54-year old chief executive has racked up around $90 million in salary, cash and pension benefits....MORE

I haven't owned the stock since '99. I was fortunate to not own this stock for the last decade. In the late '90's a very wealthy and very smart investor said to me:

"GE's phony-baloney earnings smoothing is going to have to end, it's approaching the level of a joke, in addition to violating the '33 act".

Sometimes you get lucky.

GE's Immelt reduced to whining after homicidal rant from Jack Welch (GE)

May '08: GE Stock Lower Than Sept. 10, 2001 Close; Immelt Buys Some (GE)

Oct. '09: "Can R&D Save General Electric?" and "GE's Risky Energy Research" (GE)

Combined with lobbying and firing Immelt....

Oct. '09: General Electric; Jeff Immelt: FAIL (GE)

I've been asked why I am so negative on GE. The short answer:
The wealth destruction that this company has visited on it's shareholders is simply breathtaking.
On the day Jeff Immelt took over as CEO, September 10, 2001, the stock closed at a split adjusted $30.13. In early pre-market trade this morning it is changing hands at $16.31.

That is a compounded rate of just under negative eight percent per year.

Is it any wonder that GE has decided their future lies in lobbying the government to mandate their products? From light bulbs, where they and Phillips basically wrote the law that will ban incandescent lamps, in the process shutting down all U.S. manufacturing and shipping the jobs to China, to lobbying for the $300 million "Cash for Refrigerators" that starts later this month, to lobbying to stall the cleanup of the Hudson of their PCB waste, to lobbying for the hog-trough of giveaways that is cap-and-trade, these folks epitomize Immelt's statement:

It's never been a free market; it's never gonna be a free market. That's just the way it is....

Dec. '09: Mean Street: The Lost Cause of General Electric and Jeff Immelt (GE)

GE is up a nickel at $15.71. This is one sick stock, I'm starting to think that the only catalyst to bust it out will be Immelt's departure....

January 2010: Schaeffer's "Three Stocks to Watch: General Electric" and "A Year of Living Sideways" (GE)

Long time readers know that I don't think much of current GE management. The stock is down over 50% since Jeff Immelt took over in 2001. Considering the assets he had to work with the result is pathetic...

One of these days I'll tell you what I really think of the guy.

Here's how to get all of our posts on GE:

site:climateerinvest.blogspot.com climateer general electric

Google says there are three thousand hits. I don't remember typing that much, we've had quite a few though.